Corporation tax cut reinforces the message that the UK is open for business, say tax experts. Photograph: Alamy

Business leaders welcomed bigger-than-expected cuts to corporation tax in Wednesday's budget – and the signal it could fall to as low as 20% – but warned the chancellor the reduction was not a "silver bullet" to bolster the economy.

George Osborne, describing his budget as one that "unashamedly backs business", accelerated the cuts in corporation tax announced last year by reducing the headline rate by two percentage points, rather than one, from 26% to 24% from next month. He also pledged to reduce the rate to 22% – a percentage point more than previously announced – by 2014 in a move he said was an advertisement for investment and jobs in Britain.

The UK would then have the lowest corporation tax in the G7 and the fourth lowest in the G20, Osborne said, signalling that he was heading for a 20% rate.

The chancellor added that he was raising the bank levy, regarded by HSBC as a tax on being headquartered in the UK, to keep that revenue at £2.5bn a year.

Despite his claim that he was eyeing a 20% tax rate, the Institute of Directors called on him to aim for 15% by 2020.

The reduction of the top rate of personal tax from 50p to 45p was regarded as just as significant as the reduction in corporation tax, although there were warnings that high earners would now defer any income until next April when the 45p rate will come in.

Chris Sanger, head of tax policy at Ernst & Young, said: "Combined with the announcement on the 50p rate, [the corporation tax cut] reinforces the message that the UK is open for business."

Employers' body the CBI echoed this view. "An extra 1% off corporation tax this year could make a big difference to investment intentions. Plans to reduce the top rate of tax to 45p by April 2013 will show best and aspiring talent that this government wants them to create wealth here," said John Cridland, CBI director general.

The cut in corporation tax will cost £920m annually by 2016-17, while the increase in the bank levy on balance sheets (rather than profits) to 0.105% from 0.078% will ensure that the £2.5bn target Osborne wants to raise from it each year is reached. Without the increase, there would have been a shortfall every year between now and 2015/16, when it was forecast to hit £455m.

Osborne said the Office for Budget Responsibility reckoned the reduction in corporation tax would increase the level of business investment by around 1% – £3.4bn between now and 2016.

Even so, Terry Scuoler, chief executive of the manufacturers' association EEF, was not convinced: "The chancellor began positively by setting out his thoughts for a new economic model. But, by the end of his speech, the task of rebalancing our economy looked as daunting as ever. While there are some helpful measures, they fail to send a strong enough signal to manufacturers that now is the time to bring forward their investment plans and to do it here. The corporation tax cut is welcome but, on its own, it is not the silver bullet that will unlock the business investment our economy urgently needs."

Simon Walker, director general of the Institute of Directors, saw the corporation tax cut as "a positive step in the right direction" but stressed "Britain urgently needs to become a competitive, low tax economy".

"It will take time and serious action to rebuild this country's reputation as a place which welcomes business, and reducing corporation tax year-on-year helps that process. We should be aiming for a corporation tax rate of 15% by 2020– that would put Britain in a very strong position," he said.

There were also warnings that the rise in the bank levy would put further strains on lending to businessesas it is based on balance sheets, which banks can reduce by shrinking their lending.

Tom Aston, financial services tax partner at KPMG, said: "Once again there are concerns that the government's desire to maintain an annual bank levy take of at least £2.5bn may create the wrong incentives for bank lending. If banks shrink their balance sheets then they will pay less bank levy, but typically at the same time they will be lending less to the economy."

The levy cost the UK's biggest bank HSBC £350m in 2011, when it also paid £189m corporation tax in the UK. Barclays paid £325m and does not disclose how much UK corporation tax it paid. Loss-making Lloyds Banking Group paid £189m in the levy, which cost Royal Bank of Scotland £300m. RBS now expects its bill to increase by £100m as a result of the rise and does not expect to pay corporation tax in the UK for some time as it has £2.9bn of deferred tax assets stored up from losses.